As channeled by Saudi billionaire investor Prince Alwaleed bin Talal, here is the Dubai defense. It amounts to saying “you’re all big boys”, while stomping nastily on investors’ feet.
These banks are very mature banks, and they have to differentiate between a corporate loan and a sovereign loan. When things go sour, you can’t have some banks in the West going to Dubai and saying ‘oops’ and crying wolf and saying, ‘You should have guaranteed those loans.’
I guess that the news about Dubai World came on Dubai letterhead had more to do with paper supplies near the closest printer. Good to know.